The demand curve for haircuts at Terry Bernards Hair Design is P = 20 0.20Q where
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P = 20 – 0.20Q
where Q is the number of cuts per week and P is the price of a haircut. Terry is considering raising her price above the current price of $15. Terry is unwilling to raise price if the price hike will cause revenues to fall.
a. Should Terry raise the price of haircuts above $15? Why or why not?
b. Suppose demand for Terry’s haircuts increases to P = 40 – 0.40 Q. At a price of $15, should Terry raise the price of her haircuts? Why or why not?
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Related Book For
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021718
11th edition
Authors: Christopher Thomas, S. Charles Maurice
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